Epitome of budget discipline erosion<\/p>\n
The state-owned workers' social insurance firm PT Jamsostek
\nadmitted Wednesday that it had spent Rp 3.1 billion (US$911,000)
\nof its budget to fund the deliberation of a manpower bill by the
\nHouse of Representatives. Thee Kian Wie, a senior researcher at
\nthe Indonesian Institute of Sciences, discusses the issue.<\/p>\n
Question: Minister of Manpower Abdul Latief had reportedly
\ninstructed PT Jamsostek to allocate Rp 7.1 billion for the
\nfunding of the manpower bill deliberation a few months ago and
\nthe company admitted to spending only Rp 3.1 billion. Are state-
\nowned companies allowed to spend money for such an activity?<\/p>\n
Thee: Such spending has been made inappropriately. If the
\ncompany spent the money on instructions from the minister, that
\nmeans the spending was made abruptly and was not planned before.
\nThat is an example of an erosion of budget discipline. Violations
\nof budget discipline opens opportunities for the government or
\ngovernment officials to put additional burdens on state firms,
\nwhich would surely hinder them from operating efficiently.<\/p>\n
Do you think that other state-owned companies also receive
\nsimilar instructions from the ministers to whom they are
\nresponsible?<\/p>\n
Such practices are common among state-owned firms. They are
\noften instructed to finance government projects or programs which
\nare not mentioned in annual state budget plans. That increases
\nthe burdens on state firms, which currently have to bear too many
\nresponsibilities. They have had to allocate one percent to five
\npercent of their net profits to assist the development of small
\nbusinesses and cooperatives. How can they operate efficiently
\nthen?<\/p>\n
Jamsostek's president Abdillah Nusi said Wednesday that the
\nspending was sound because the bill, when enacted into law, would
\nguarantee better protection for workers. Workers' protection is
\nthe mission of the company. Is such a reason acceptable?<\/p>\n
I think it is only a pretext. There is a tendency among
\ngovernment officials to think along the lines that the end
\njustifies the means or whatever they wish to do could be done and
\ncertain unscrupulous government officials regard state companies
\nas \"milchcows\".<\/p>\n
Jamsostek has also acknowledged that it had invested some
\nRp 125 billion in five of the 16 liquidated insolvent banks. Was
\nthat caused by poor management of shareholder investments?<\/p>\n
That is quite questionable.<\/p>\n
President Soeharto has instructed Jamsostek to allocate Rp 2
\ntrillion of its investment funds for the development of small
\nbusinesses and another Rp 1 trillion for low-cost housing loans.
\nWhat do you think about such investments?<\/p>\n
If Jamsostek and other state firms are not given autonomous
\nmanagerial rights, they will not be able to generate profits and
\noperate efficiently. There is actually an overlap in the
\ndevelopment of small businesses. Besides the one percent to five
\npercent portion of state companies' profits, other funds have
\nalso been allocated for the development of small businesses. (Big
\ncompanies are required to \"sell\" a portion of their shares to
\ncooperatives and small businesses with payments derived from the
\ndividends that they will receive. Banks are required to allocate
\nno less than 20 percent of their loans for small businesses and
\nthe Jimbaran group of large businesses are also demanded to
\nassist the development of small businesses).<\/p>\n
What measures should be adopted to prevent the government and
\nstate-owned companies from violating budget plans?<\/p>\n
Laws should be established to oblige the government to make
\nexpenditures in line with budget plans and to give managerial
\nautonomy to state firms so that their spending cannot be easily
\ninfluenced by ministries.<\/p>\n
They must be in the form of laws, not government regulations.
\nGovernment regulations will not be adequate because they can be
\neasily revoked or replaced by other regulations at any time.<\/p>\n
The rules must be clear and their implementation must be
\ntransparent. The spending of state firms must be well planned and
\nshould not be based merely on decrees of officials.<\/p>\n
We must be disciplined. We are now undergoing an economic
\ncrisis because we are not disciplined, not because our financial
\nsector has been affected by speculation from currency traders
\nlike George Soros. The crisis is a punishment by market forces
\nand we must learn from it.<\/p>\n
House -- Page 2<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/epitome-of-budget-discipline-erosion-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }